What happens to debt when you die?

Question

When someone dies, all of his or her assets are considered frozen for a 1-year period. During that time, all creditors and lenders with valid claims against the deceased person have the right to bring those claims to the probate court. The court then pays the debts the person owed out of his or her estate, which is comprised of everything the deceased owned. Here are a few things to keep in mind.

Debts owed are paid before any inheritances are passed on to family members. Therefore, family members may be unable to receive property or other assets if the estate lacks the funds. However, if the estate does not have enough value to pay back creditors, the creditors are unable to go after the deceased person's family members.

Any debt that is also held by another party, such as a cosigner on an account, must be paid by the cosigner.

Proving a debt can or cannot be paid after death can be a challenge. It is best to work with an attorney through the probate process and to avoid probate whenever possible.

Answer

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